Posted on: July 5, 2017

Rejoice, Your Next Vacation just Got Cheaper Due to GST

GST Impact

If you are a travel enthusiast, it’s time you give a thumbs-up to the newly implemented Goods and Services Tax (GST). With cheaper air tickets and hotel stays, thanks to GST, your next vacation just became more affordable- an added reason to plan your next trip quickly. But if you are one of those travellers who like to holiday in luxury, you may have to shell out some extra few bucks. Here is how GST may impact your next vacation costs.

GST on Hotels and Resorts

The GST council has kept different hotels under different tax slabs depending upon the service they provide and the amount they charge. Hotels and lodges that charge less than Rs 1000 per day would now cost less as no tax would be applicable on them. Hotels with tariff from Rs 1000 to Rs 2,500 per day would attract a tax of 12%. 18% tax would be charged on hotels lying in the tariff range of Rs 2,500 to Rs 5,000. Prior to GST, a tax of 21-22% was levied on hotels in most of the states. However, stay at 5-star luxury hotels and resorts have become more expensive with a 28% tax rate imposed on them.

Hotel Type Before GST After GST
Hotels below Rs 1000 per day Up to 15% Nil
Rs 1000 – Rs 2,500 per day Up to 22% 12%
Rs 2,500 – Rs 7,500 per day Up to 22% 18%
5-star Hotels Up to 22% 28%

GST on Airlines and Railways

After the implementation of GST, economy class air travel will attract 5% tax whereas 12% tax would be charged on business class air travel. Earlier, economy class air tickets were taxed at 5.6% whereas 8.4% tax was levied on business class air tickets. Hence, there will be small savings in case of economy class tickets whereas business class tickets would cost more.

The government has charged no tax on second class, sleeper class and metro tickets. All AC and first class tickets would attract a tax of 5%. Catering charges for food served in trains such as Rajdhani, Shatabdi and Duronto would also get modified as per the GST slab. Earlier, 4.5% service tax was levied on AC and first class tickets. GST implementation will increase the price of AC tickets marginally.

Travel Type Before GST After GST
Economy class air tickets 5.6% 5%
Business class air tickets 8.4% 12%
Sleeper class and second class Rs 20 Nil
First class and AC train tickets 4.5% 5%

GST on Cabs and Public Transport

Now that the GST has been implemented, cab and taxi facilities will become cheaper. Earlier, taxi services were taxed at 6% which has now been reduced to 5% giving commuters a reason to smile. All public transport facilities like buses, monorail systems, trams and inland waterway systems have been kept out of the taxation ambit.

Earlier, AC buses attracted a tax of 6% which has now been reduced to 5%. However, online booking of tickets for such buses would cost more as it will attract 18% GST instead of 15% service tax.

Travel Type Before GST After GST
Cab aggregators and taxis 6% 5%
Buses, monorails, metro, inland waterways Nil Nil
AC Buses 6% 5%
AC bus ticket booking 15% 18%

GST on Amusement Parks and Recreational Activities

People will have to pay 28% GST for amusement and theme park tickets. Earlier, amusement parks were exempted from the tax blanket and it was only in 2015 that 15% service tax was imposed on their tickets. Recreational activities such as circus shows, classical dance shows, drama, theatrical performances, etc. would attract the GST of 18%. Earlier, most of the recreational activities were taxed between 0-15% which would now increase by at least 3%. Cinema was taxed from 0-110% depending on the state where the theatres and multiplexes operated. Under GST, cinemas would attract a tax of 28% all over the country.

Activity Before GST After GST
Amusement Park 15% 28%
Circus, Drama, Dance shows, etc. 0-15% 18%
Cinema 0-110% 28%

Under GST, your travel and vacation would completely depend on how you plan your vacation and what facilities you want to avail. Proper planning may help you to save on taxes and thus make your vacation cheaper. Travel and vacation would cost less for the middle class whereas it will cost more for those who love luxury and plan to make their holidays lavish and extravagant.

Find More Information: How GST will Impact Your Holidays

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